Lincoln County Power District No. 1 Manager Dave Luttrell explains to a small group at a public meeting the reasons for the forthcoming base rate increase of electric power rates. Luttrell went on to say that much of it has to do with the loss of about $600,000 a year with the shutdown of the SNWA MX 5 well at Coyote Springs. (Dave Maxwell photo)
Pending approval by the Lincoln County Power District No. 1 Board at their Oct. 14 meeting, rates are expected to increase by about 15 percent for customers in Lincoln County.
Only seven members of the public came to the open meeting in the newly remodeled main courtroom at the County Courthouse in Pioche Sept. 24, for the nearly two-hour presentation plus question and answer period for the Cost of Service Study and Rate Design for Fiscal Years ending 2013-2017.
Power district manager Dave Luttrell said no action was to be taken by the board following the meeting, it was merely to explain to the public why the increases were going to have to take place.
He thought that, if approved by the board in October, the rates would be effective this fall, and expected to last for about four years before review. Although he did say, if federal predictions go as expected, LCPD might have to impose another rate increase in 2015.
Luttrell said the power district is a public utility, but operates on a non-profit basis, and is “in the red at present.”
One point he strongly emphasized, is that changing the base rates does not mean that an individual’s power bill was going to go up by 15 percent, but some increases will be coming. He explained the reasons as being threefold: the increase in purchased power costs, general increase in costs (materials, fuel, etc.), and the loss the Southern Nevada Water Authority MX 5 well at Coyote Springs in April 2013.
Looking at the rate adjustment background of the district, previous rate adjustments have come in 1985, 1990, 1993, 2004, and 2007. “We take adjusting our base rates very seriously. We have only done it a few times since 1985,” said Luttrell.
He said SNWA suddenly shut down operating the well in April, “and that lost us about $600,000 ($591,445) a year in revenue, about 10 percent ($5 million) of the overall revenue for the district. It’s a huge hole we have to figure out how to solve.” He said the board started working on the studying possible new rate proposals at that time.
Electric power the district has been receiving from Hoover Dam has become less and less over the years, Luttrell noted, because of the dramatic dropping of the level of Lake Mead and the amount of power the dam can produce. He said LCPD has to pay Hoover Dam about $98,000 a year, regardless of how much power they receive, which he said is most always less than what should be delivered.
Because of the less power coming in from Hoover Dam, in 2005 LCPD started to have to buy supplemental power on the open market at fair market prices through the Silver State Energy Association to replace what is not going to be delivered from Hoover. Ed Wright sits on the Silver State board for LCPD.
Even though market prices are not that much different that Hoover Dam prices, over time forward projections will be quite wide-spread.
Continued dropping of the level at Lake Mead (listed at 49 percent in August 2013) will cause Hoover Dam to not be able to produce enough power to fulfill the growing demands of southern California and the Phoenix areas. Luttrell said, “The demand is greater than the amount of water in the lakes behind the dam to meet the need, and it continues to be a problem.”
In 2013, LCPD bought about $2 million on the open market, and he expects in coming years he may have to buy upwards of $4 and $5 million.
Just how much the rates will raise for each initial industrial, agricultural, commercial, and residential customer in the County will be decided after the both the LCPD and Alamo Power Board have their respective meetings in October.
